Digital Transformation | Hybrid Cloud | IoT

Wednesday, January 19, 2011

Managed Services Gaining Global Momentum

Savvy business leaders are increasingly turning to managed services to enable them to focus more attention on their core competencies, according to the latest market study by Pyramid Research. Managed services free up valuable IT and networking resources, decrease staffing needs and enable investment in activities that differentiate companies from their competition.

That said, the primary adoption driver is the current state of the global economy. As business leaders everywhere face increased financial pressure, they’re looking to managed services to offload their capital expense burden and improve operational efficiencies.

Analysts typically define managed network services as the management and monitoring of telecom infrastructure or applications by a third party -- either with equipment at the customer’s premise or hosted in a managed services provider (MSP) data center.

Responding to the Growing Global Demand
MSPs have responded to the increasing demand for new managed cloud services with a dramatic increase in investment to grow their managed services portfolios to include different types of out-tasked IT services for their customers. They are creating additional services that can be layered on top of the basic transport network offerings.

To learn more about the current market potential, Pyramid Research conducted an independent survey of more than 200 IT professionals from around the world to determine the types of managed services they’re using.

Primary conclusions from the market study include:

Executives polled were willing to spend a large portion of their IT budgets -- between 10% and 20% -- on network-centric managed services, as the providers continue to prove the value and reliability of their offerings.

The majority of enterprises -- almost 60% -- already use a managed service and have been doing so for between one and four years.

Europe still has had the highest adoption of managed services -- driven in large part by the challenges of managing and maintaining business across multiple borders. However, the economic recession drove more North American companies to adopt managed services -- to lower costs and improve employee productivity.

Additionally, emerging markets, such as those in Africa and Latin America, are preparing for managed services -- especially as broadband network access becomes more established.

Multinational corporations and large enterprises have the most uptake in network-centric managed services, with SMEs now also looking for proven solutions that lower their costs.

IT managers are applying a significant portion of their budget to managed services. Almost 25% of enterprises spend between $10,000 and $50,000 annually. Additionally, 26% of enterprises allocate between 10% and 20% of their IT budgets for managed services.

The types of managed services that MSPs are providing are growing at a phenomenal rate. They manage everything from unified communications (UC) applications, to network security, to network connectivity and telepresence video collaboration services.

Growth is expected to continue throughout the U.S. and Europe -- especially in Eastern European countries, over the next 18 months. Latin America and Asia will provide continued expansion of these managed services.